- The soaring gold prices and increasing political and economic issues in South Africa are bringing into focus the potential of Ghana as a major production source for gold.
- Gold prices have risen by30% over the last year.
- At the same time, mining majors are exploring options to diversify and move away from South Africa, due to issues such as electricity supply, labour relations and diminishing yields from deep mines.
The soaring gold prices and increasing political and economic issues in South Africa are bringing into focus the potential of Ghana as a major production source for gold. Gold prices have risen by30% over the last year. At the same time, mining majors are exploring options to diversify and move away from South Africa, due to issues such as electricity supply, labour relations and diminishing yields from deep mines.
Ghana is also gearing up to reap benefits from the opportunity. The central bank of Ghana is working closely with the Ghana Chamber of Mines to secure industry agreement to its proposal to start paying for gold with cedi rather than dollars. If it succeeds in building a consensus, Gold miners in Ghana will start transacting with the central bank in cedi. The proposal will help Ghana to conserve foreign exchange reserves, remarked Bank of Ghana governor, Ernest Addison. In June this year, the Bank of Ghana launched a gold-buying programme, with a strategy to double its holdings over the next five years.
From a low 2% output in 2020, due to COVID 19, gold production in Ghana is expected to grow by 9% in 2021. However, political analysts feel that the threat of resource nationalism under re-elected president and a continuation of the agenda to monetise future royalties may pose risks to mining investment in Ghana. Additionally, the deteriorating security situation in West Africa is another challenge for extractive operators across the region. Gold mining operations in Ghana are threatened by Jihadist groups operating in Mali, Burkina Faso and Niger, say experts.
